Correlation Between Swan Defined and Templeton Global

Can any of the company-specific risk be diversified away by investing in both Swan Defined and Templeton Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Swan Defined and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swan Defined Risk and Templeton Global Balanced, you can compare the effects of market volatilities on Swan Defined and Templeton Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Swan Defined with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Templeton Global.

Diversification Opportunities for Swan Defined and Templeton Global

0.96

Correlation Coefficient

Swan Defined  Templeton Global

Almost no diversification

The 3 months correlation between Swan and Templeton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Templeton Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Balanced and Swan Defined is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Swan Defined Risk are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Balanced has no effect on the direction of Swan Defined i.e., Swan Defined and Templeton Global go up and down completely randomly.

Pair Corralation between Swan Defined and Templeton Global

Assuming the 90 days horizon Swan Defined is expected to generate 1.64 times less return on investment than Templeton Global. But when comparing it to its historical volatility, Swan Defined Risk is 1.87 times less risky than Templeton Global. It trades about 0.25 of its potential returns per unit of risk. Templeton Global Balanced is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  252.00  in Templeton Global Balanced on May 3, 2025 and sell it today you would earn a total of  19.00  from holding Templeton Global Balanced or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Swan Defined Risk  vs.  Templeton Global Balanced

Swan Defined Risk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Defined Risk are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Swan Defined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Global Balanced

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Global Balanced are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Templeton Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Swan Defined and Templeton Global

The main advantage of trading using opposite Swan Defined and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined position performs unexpectedly, Templeton Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Templeton Global will offset losses from the drop in Templeton Global's long position.

The idea behind Swan Defined Risk and Templeton Global Balanced pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.